China embarked on outward FDI (OFDI) with the advent of economic reforms in 1979 but it
was not until 2000 that Chinese OFDI began to grow significantly. By that year, the Chinese
government proposed a new national strategy, “Go global” and issued several policy
incentives, including simplified procedures for government approval of investments,
encouragement of state-owned banks to provide funding for OFDI, and tax incentives for
OFDI (Yu & Jiao, 2011). As a result, FDI surged. In recent years, China has challenged the
stereotype of being an exporter of cheap products by embarking on massive foreign direct
investment (FDI) in both developing and developed countries. And the European Union (EU)
is one of the most favored destinations (Hanemann & Huotari, 2015). Especially after 2008,
Chinese FDI in EU started to increase rapidly partly fueled by the Eurozone debt crisis which,
inter alia, led to depreciating asset prices in the EU (Ma & Overbeek, 2015).

This working paper is a report from the workshop on Entrepreneurship Development arranged by the Centre for Business and Development Studies at CBS and the Danish Ministry of Foreign Affairs in September 2010. The objective of the workshop was to use the participants’ joint knowledge and experiences to discuss and provide conclusions on what role entrepreneurship development has played and can play to stimulate growth and employment in Africa. Entrepreneurship development is understood as the promotion and development of activities and processes that foster and support productive entrepreneurship in the society. The workshop should provide inputs to how entrepreneurship in Africa can be supported and be used in the development and implementation of the “Growth and Employment” priority of the new Danish strategy for development cooperation. The workshop had twenty participants with long standing insight to the challenges of entrepreneurship development and employment growth in Africa from international organizations, development cooperation partners, universities and private enterprises and organizations. The report contains the key issues discussed at the workshop and ends with conclusions and recommendations.

Prahalad’s thesis is extremely vague, indeed it identifies seven versions. The paper then turns to examining the 12 major cross-country case studies that Prahalad uses as corroboration for his views. It argues that the evidence that Prahalad offers to support his claims fails to do so, or, proves to provide counter-examples. Furthermore, the case study approach that Prahalad uses is methodologically weak for the strong claims that he makes. Placing the argument in a broader perspective, it is argued that the bottom of the pyramid approach can do more harm than good if it, as Prahalad does, plays down factors which have been important to large scale poverty reduction in countries such as South Korea, China, India and Vietnam. After assessing the book on its own terms, the paper asks whether or not income poverty is the correct space in which to evaluate the impact of business activities. The concepts of income poverty, multidimensional poverty and capability deprivation are discussed and a notion of fundamental capability deprivations as being the relevant evaluative space is defended. It is argued while the Bottom of the Pyramid approach fares better on these criteria, but still leaves a lot to be desired. The eradication of deprivation requires more than self-interested firms.

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A vibrant fashion scene is emerging in Africa, spearheaded by a new generation of young
fashion designers. Drawing on a multi
-
sited study of Ghanaian, Ugandan and Zambian
female
designers, this article examines the emerging fashi
on industry as a site for
entrepreneuring where people’s aspirations to bring about personal, cu
ltural and socio
-
economic development
converge. The paper reveals how fashion designers envision their
endeavours as pathways for pursuing their passion, for changing the associations
ascribed to ‘Africanness’, and for revitalising failing clothing industries. The paper
proposes that while th
e emerging character of the industry creates uncertainty and many
obstacles for running viable businesses, fashion designers remain enthused by narratives
about the industry’s future prospects.

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A theoretical probe into the borderland of Business Studies and Development Studies

Hansen, Michael W.; Schaumburg-Müller, Henrik(København, 2007)

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Resume:

Business studies and development studies have evolved relatively independently of each other – business studies occupied with profit maximizing strategies and the activities of entrepreneurs, firms and value chains, and development studies with economic, social and political development strategies of countries and regions. However, as more and more of the world’s value-adding activities take place in developing countries and as MNCs increasingly incorporate developing countries’ markets and resources in their strategies, business studies has taken a growing interest in the particular conditions of local and foreign firms doing business in such environments. Simultaneously, as the limitations of state led development strategies have become apparent and as market ideology has become prevalent in a growing number of countries, development studies has directed growing attention towards the role of entrepreneurship, firm strategy, private sector development and foreign direct investment as vehicles for economic and social development. In other words, both fields approach business in development from different sides. This paper seeks to identify themes related to the firm in developing countries as taken up by both business and development studies. We suggest the themes of common interest and potential convergence to be those of market failures, institutions, entrepreneurship, clusters, and firm internationalization. The paper illustrates that there are substantial opportunities for cross-fertilization between the two bodies of academic enquiry, and indeed, that without a conversation between the two literatures in the era of globalization, the analytical and predictive power of both may be seriously impaired.

Little is known about impact of FDI on economic development in Africa compared to other developing countries, which the paper seeks to address by focusing on examples of impact in Mali and South Africa. The arugment put forward is that the impact has to be identified at the level of the industry or sector and the level of the firm with regard to employment effect, income generation and skills development. The mining and electricity and railway sectors in Mali are investigated and compared to the automobile industry in South Africa. The paper ends with suggestions for future investigations which can shed more light on the pertinent issues about impact of FDI in Africa.

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Extending the UN Framework to connect Political CSR with Business Responsibilities for Human Rights

Jonsson, Jonas; Fisker, Mette; Buhmann, Karin(Frederiksberg, 2016)

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Resume:

The literature on Political CSR (PCSR) outlines the political role of corporations, but fails to offer
concrete suggestions for businesses to
fill
governance gaps
through provision of public goods
.
Conversely, the
political role of Multi
-
National
Enterpris
es
(MN
E
s) plays a limited part in the UN
Framework on Business and Human Rights
, which was adopted by the UN in 2008 and forms the
basis for the 2011 UN Guiding Principles on Business and Human Rights
. Th
is paper
contributes to
connecting the two approache
s by drawing on insights from the PCSR literature
to theorize on the
extent of
human rights responsibilities of MN
E
s
, and combining this with the human rights focus of
the UN Framework
. Drawing on existing literature's coverage of MN
E
s operating in develop
ing
countries, we discuss how businesses can improve the respect and fulfilment of human rights.
We
propose an
'Extended UN Framework' to help attribute political responsibilities to MN
E
s that reflect
their political power. The Extended Framework combines
the original UN Framework’s ‘do no
harm’ approach with a leverage
-
based approach for firms to contribute to delivering public goods
that are human rights.

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A Model for Analysing the Progress of Knowledge Development in Developing Country Firms

Lehmann, Sanne(København, 2007)

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This paper addresses the crucial call for upgrading to more value-added production in developing country firms in the light of increased global competition and suggests that such upgrading demands a shift in focus from investment in technology to investment in people, knowledge and learning. In this line of thinking, the aim is to propose a model for analysing the progress of knowledge improvements in developing countries as an outcome of the management of human, social and organisational capital. In this regard, the paper considers relevant practices and strategies in the context of developing country firms, the challenges that effect firms and institutions in this process, and the appropriate level and method of the analysis.

In this article, we explore the relationship between industrial clusters and social upgrading in developing countries. Our article focuses on the hitherto little-considered influence of the economic and regulatory environment on the social upgrading of a cluster and on its governance system. In doing so, we develop an analytical framework that seeks to explain how the enabling environment and different actors in cluster governance can either facilitate and/or hinder the process of social upgrading in cluster settings in developing countries. Finally, the conclusion outlines our main findings, the research and policy implications of our analysis.

The increasing integration of global markets creates opportunities, as well as challenges for developing countries. Even though the picture of Africa as a ‘hopeless continent’ (Economist, 2000) has changed to the ‘next Asia’ (Deloitte, 2016), poverty, unemployment and business failure rates remain high (Mol, Stadler, & Arino, 2017). More precisely, African firms have to cope with the difficult environment in their local economies, which are often dominated by institutional voids, corruption and market risks (Tvedten et al., 2015). At the same time, local companies face fierce competition by foreign companies entering their local markets due to the trade liberalization reforms that took place since the 1980s (Moini, Kuada, & Decker, 2016). These factors contribute to the poor performance of African companies, which is reflected by stagnating exports, particularly in the manufacturing sector (Söderbom & Teal, 2003).

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China’s FDI to Africa has drawn much attention recently, partially because of the high profile China has given it, and partially because of the political and economic effects it is having on Africa. This paper begins by outlining the political context which is needed to understand Chinese outward FDI, namely the introduction of the "open door” policy and, more particularly, its policy towards Africa. The paper then goes on to give an overview of Chinese FDI in Africa. The paper then turns to ask the question: Is Chinese FDI developmental? To answer this question, it examines the notion of development and argues that much of the "western FDI” debate is severely limited in as far as it concentrates on income poverty and ignores other aspects of multidimensional poverty. After giving an overview of China’s involvement in Africa, the paper turns to four case studies of Chinese FDI, examining the developmental impacts on a variety of dimensions (as far as is possible) of different types of FDI in different regimes, namely resource seeking and manufacturing in Zambia, an infrastructure project in Botswana and construction/tourism in Sierra Leone. It warns against generalising from these cases, but suggests that the developmental effects so far have been limited.

The study of innovation and technological upgrading experienced a significant interest in the academic literature, especially within the developing countries (Lall, 1998, 2001; Kim and Nelson, 2000; Ariffin and Figueiredo, 2004). The lack of involvement by developing countries in radical innovative capabilities (Rasiah, 1994; Hobday, 2005) and the interest of scholars in learning technological capability building and technological catch up processes has directed researchers to analyze various mechanisms or drivers that contribute to technological upgrading, especially in developing countries, more so in the manufacturing sector. This study aims to investigate the R&D activities and the internationalization of these activities undertaken by foreign firms within the Malaysian manufacturing sector. The study aims to provide answers to the following questions: 1. What is the status of the systems of innovation within the Malaysian manufacturing sector? 2. What is the role played by the agents of innovation, in particular TNCs or MNCs, in relation to R&D activities and its internationalization? and, 3. How is the Malaysian manufacturing (local and foreign) technological and R&D progress to date? This study confirms that the Malaysian manufacturing systems of innovation is weakly positioned but shows limited evidence of process innovation and not product innovation. However, evidence of innovation differs among states and sectors owing to differences in the systems of innovation. Although, Malaysia has not been chosen as a site for offshoring or outsorcing of R&D activities to a significant degree, it is found that one very important driver of innovation is the central role that multinational enterprises play in the Malaysian manufacturing systems of innovation. Process innovation is conducted by foreign subsidiaries and is on the rise in key the electronics industry. It is also found that technological learning by local firms is mainly through linkages, sub-contracting and technological transfer.

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(Re) Integrating the strategic management perspective in the theory of multinational corporations

Hoenen, Anne Kristin; Hansen, Michael W.(Frederiksberg, 2009)

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Resume:

The contemporary literature on foreign direct investment (FDI) has to some extent ’forgotten’ a key insight of the early FDI literature, namely that FDI to a large extent is driven by strategic interaction of firms in oligopolistic industries. Instead the FDI literature has focused, at first on FDI as a way of generating efficiency in cross border transactions, and later on FDI as a way to effectively leverage and build capabilities across borders. These efficiency and capabilities perspectives on FDI may have been adequate in a situation where global competition still was in its infancy. However, in recent years, we have seen the emergence of truly global oligopolies, e.g. in electronics, aerospace, aviation, software, steel, automotive, construction, brewing, etc. These oligopolistic industries have been consolidated through massive waves of cross border M&As in the second half of the 90s and from 2003-2007. We argue that in such industries it is not adequate to analyze FDI only in terms of efficiency or resource leverage; FDI must also be understood in terms of its contribution to the global strategic positioning of the investing firm. The paper seeks to re-discover’ the oligopolistic competition perspective, drawing on the early insights of the Hymer-Kindleberger-Caves tradition as well as on the recent Strategic Management literature, but bringing these into the context of globalization. It is argued that global strategic interaction in oligopolistic industries is manifest in well known FDI phenomena such as follow-the-leader, client follower, and first-mover. While the paper attempts no formal testing, evidence indicative of oligopolistic competition motivated FDI is presented, e.g. from the recent cross border M&A waves and from the recent surge of FDI in emerging markets.

Changes of the global economy have led to a much deeper integration of firms from developing countries. Multinational corporations are increasingly using offshore-outsourcing to maintain competitiveness and market shares. While the implications of this trend has been studied from the point of view of the multinational firm and its home economy, far less attention has been paid to the developing country firm participating in the outsourcing arrangement and its strategic options. From this point of view this paper reviews the outsourcing literature and identifies theoretical contributions that can be employed to build a platform for analyzing the strategic implications of outsourcing for local firms in developing countries.

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Indian outward foreign direct investment (FDI) has risen dramatically in recent years. This reflects that Indian multinational corporations (MNCs) are asserting an increasingly important role in the global economy, not only as resource and market seekers in less developed countries, but increasingly competing on par with western MNCs in their home markets. When we confront the Indian outward FDI path with theories of outward foreign direct investment from developing countries, a number of puzzles and anomalies becomes evident: Normally, we would expect strong inward FDI performance to precede strong outward FDI performance, however in India the rise in outward FDI has been almost simultaneous with the rise in inward FDI; Normally, we would expect developing country MNCs to invest in like or less developed countries, however Indian MNCs have in a rapid sequence moved into developed economies; Normally, we would expect developing country MNCs to be operating with less advanced technologies and business models, however Indian MNCs have moved directly into FDI in advanced sectors and technologies. This paper will offer a number of explanations for the unique Indian outward investment path, explanations that take their point of departure in the idiosyncratic nature of Indian industrialization.

This paper addresses the domestically owned food-processing industry in Kenya and explores the
sale of processed food products to the domestic ‘modern’ retail sector. Food processing represents a
step up in the value chain compared to fresh food production and may thus, at least potentially, lead
to economic development. In focusing on food-processing businesses and on domestic rather than
global market sales, this paper distinguishes itself from studies on Sub-Saharan African suppliers to
global value chains. The potential importance of domestic ‘modern’ retail formats to Kenyan food
suppliers is underlined by the fact that after South Africa, Kenya is Africa’s second largest market
for ‘formal’ retail, mostly because of the growing Kenyan middle class (EIU, 2013; Business Daily,
2015). What is not clear, however, is the extent to which retailers in Kenya currently source
processed food products locally and thus whether food processing – as opposed to fresh food
exports – retains importance for suppliers as well as for the Kenyan economy. This paper aims to
contribute knowledge to this subject on which very little research exists. Based on fieldwork, the
paper shows that a variety of entry barriers exist for Kenyan food processors that attempt to supply
the emerging ‘modern’ retail sector domestically. The paper also shows how the requirements that
processors must meet, especially for larger domestic supermarkets, tend to resemble those
commonly described in the export sector, calling into question the extent to which domestic retail is
a viable alternative in the longer run.

Offshore outsourcing of business activities from the Global North to the Global South does not only relocate investments and jobs, but has also brought about new business demands on suppliers activities and their social and environmental impact. The article explores whether, how and why offshore outsourcing transactions between foreign firms and Malaysian firms affect the upgrading of the CSR activities of Malaysia incorporated firms, taking the particular institutional context of Malaysia into consideration. The focus is on recipient country vendors, contract manufacturers or subcontractors and their reception of and strategising about corporate social responsibility. The findings of the study indicate, firstly, that the amount of foreign (sub)contracting influences the CSR strategising of domestic firms while the global value chain position is only conditioning the offshore outsourcing portfolio. Secondly, both the corporate governance of Malaysian affiliate and the Malaysian government play an important role shaping the perception, rhetoric and organisation of CSR activities by firms in Malaysia with a domestic value chain position. Hence, firms in Malaysia are squeezed by international business linkages and the local institutional context.

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CSR is a rising phenomena in Afghanistan – but why are firms concerned about CSR in a
least-developed context such as Afghanistan, and what are the strategic benefits? This paper is one
of the first to explore these CSR issues in a least-developed country. It does so by focusing on CSR
in the Afghan telecommunication sector and in particular on ‘Roshan’ as a case company. The findings
of this paper are two-folded. First, it provides an overview of the CSR practices in the telecommunication
sector in Afghanistan. Second, it focuses on one case and explains whether Roshan
can gain strategic advantages through CSR in Afghanistan, and if so which and how these strategic
benefits are gained. The paper shows that the developmental challenges of Afghanistan are the key
explanations for why companies engage in CSR. Roshan has engaged in proactive CSR to overcome
the contextual barriers for growth. Based on an analysis of five CSR projects, it can be assessed
that Roshan enhances its competitive advantage through CSR in internal, external, and wider-
society levels. It is analyzed that Roshan influences its competitive context both from inside-out
and out-side in dimensions, and that the CSR projects could all live up to the strategic CSR criteria
drawn from the academic work of Porter and Kramer, Burke and Logsdon and Blowfield. Finally,
the paper discusses how in a context of a weak state and civil society, and massive developmental
challenges, CSR is not a matter of an ‘add-on choice’, but is based on a ‘license to operate’ motivation,
where businesses have free room for maneuvering CSR towards their strategic priorities and
business goals. Whether this creates a ‘shared value’ for both business and in particularly for the
society is however still questionable.

This paper looks at the export developments of Vietnamese garment producers after the Multi-Fibre Arrangement was removed by the beginning of 2005. It uses a Global Value Chain approach and analyses what happens when there is a major change in the institutional context, in this case shift in the basic institutional international trade arrangements. The focus is on Vietnam and the Vietnamese garment suppliers looking at how they have performed after the removal of the quota systems and what kind of strategies they have pursued. The results show that Vietnamese suppliers have been able to compete internationally after the quota removals although many of them appear to be locked in the low value end of the chain. The data show, however, that they are not only able to compete and grow but also to change between buyers and markets, which provides them with the flexibility of shifting between chains.

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MNCs are increasingly investing in developing countries to be part of rapid market growth, to enhance the efficiency of their value chains, and to access abundant resources and talent. The potential gains are high, however so are the risks. Some developing country subsidiaries become top performers in terms of growth and revenue and assume key roles in the MNCs’ global value chains, but other subsidiaries fail to meet expectations, struggling to produce positive returns and frequently experiencing stop of operations. While the issue of subsidiary performance should be at the heart of any International Business (IB) enquiry into MNC activity in developing countries, surprisingly little research has examined this issue. Based on a unique data base of approx. 800 MNC subsidiaries established between 1969 and 2008, this paper examines the evolution in subsidiary performance and the factors influencing this performance. The analysis reveals that MNC subsidiaries in developing countries have improved enormously on their performance since the early investments in the 1960s and 70s, but also that the risks of failure remain high. The paper moves on to analyze factors shaping subsidiary performance. Inspired by received IB theory, it is hypothesized that subsidiary performance is essentially shaped by five dimensions: location, industry, MNC capabilities, subsidiary role, and entry mode. A variance component analysis is employed to identify the sources of subsidiary performance. Especially MNC capabilities and subsidiary role appear to explain variance in performance, while location and industry factors appear to have less explanatory power. This suggests that while locational and industry factors affect subsidiary performance, strong MNC capabilities and appropriate strategy can make MNCs succeed regardless of location and industry. The findings of the study have important implications for the IB literature, for managers and for policy aimed at promoting FDI in developing countries.